It’s stating the obvious to say that many of us are enduring tough financial times right now.  Recession, layoffs and losses in our retirement portfolios and in the value of our homes are causing many families to tighten their belts and forego discretionary purchases.  Unfortunately, many Americans mistakenly conclude that purchasing life insurance, or scaling back their existing coverage, fits in the category of “discretionary” purchases.  Life insurance is even more important in this challenging economic environment. 

Here are some real-life stories about families whose financial security was saved because they owned life insurance:

Ebony and Shanna Blanchard – A Mother’s Wish

When Jackie Blanchard’s husband died at 28 with barely enough life insurance to pay for his funeral, she purchased enough coverage for herself to ensure that her young daughters, Ebony and Shanna, would be fine if something happened to her.  Two years later, she was diagnosed with terminal lung cancer.  Jackie used her policy’s accelerated death benefit provision to finance a home and a car for her daughters and to fund their future education.  Today, Ebony, a recent college graduate, and Shanna, a high school senior, live in the home their mother purchased for them.*

Dean Hoskins – A Timely Change of Heart

It took Dean Hoskins considerable time and effort to convince her husband, Bryan, that he needed to purchase life insurance.  Just a few years later, Bryan was diagnosed with an aggressive brain tumor.  He died six months later at age 32.  With the proceeds from Bryan’s insurance policy, Dean was able to invest in her own business as well as schedule her work hours around her young twin daughters’ needs.*

Dennis Danduran – Valuing Mom’s Contributions

Jodie and Dennis Danduran decided to purchase life insurance shortly after adopting the first of their five children.  Though Dennis was the primary breadwinner, they wisely determined that Jodie, a stay-at-home mom, also needed a considerable amount of coverage because of what it would cost to pay someone to perform all her functions.  That planning made all the difference when Jodie died suddenly of an aneurysm at 39.  The insurance money has allowed Dennis to switch to a job that gives him more time to take care of the kids, and has also been used for living expenses and to set up college funds.*

A recent survey reveals that one in three Americans doesn’t have life insurance, leaving an estimated 77 million Americans financially exposed.  While many of us are concerned about the number of Americans – estimated at 47 million – who have no health insurance, almost a third more lack adequate financial protection if one of the breadwinners in the family were to die suddenly.  The survey, conducted by IPSOS Public Affairs, a leading global research company, found that 34 percent of respondents – split evenly between men and women – are uninsured.  Of those who do have life insurance, one in five (22%) do not believe they have enough.

When asked why they lack life insurance, 43 percent of those surveyed said that coverage was too expensive, with 47 percent noting that the “uncertain economy” is restricting their capacity to purchase insurance.  Another one in four respondents (24%) said that they did not think they needed it, and one in seven (14%) felt that shopping for life insurance was too complicated.**

Meeting everyday expenses is a challenge for many of us these days.  Even so, this is not the time to consider dropping or putting off buying life insurance if a need for coverage remains.  Families with dependent children and single-parent households have the greatest financial need.  If you drop existing coverage or wait until “times are better,” you’ll likely be asked to take another health exam.  At that point, you’ll be older and your health might not be as good as it is today, and you may find it harder to qualify for coverage at an affordable rate. 

Life insurance is most definitely not a discretionary expense, especially if your income is what is helping put food on the table and keeping a roof over your head.  The contributions of a homemaker to the family should not be overlooked, either.  So while it may seem difficult to look beyond the bills that are due at the end of the month, you should maintain your current life insurance or even consider buying additional coverage.  Relying on employer-sponsored group life insurance, which is typically tied to a multiple of an employee’s income, may leave a substantial gap in needed protection.  There’s nothing more important that you can do to secure your family’s future financial security than review their and your need for life insurance. 

The way to do this is to talk with a life insurance agent, and ask him/her to do a life insurance needs analysis.  This type of analysis focuses on your survivors’ financial needs rather than your total future earnings, for example.  When determining the most appropriate type of insurance – term or permanent insurance – your agent should consider the amount of coverage needed, the duration of the need, the amount of disposable income available to purchase life insurance, as well as the self-discipline of the proposed owner and his or her risk tolerance. 

* Source:  The Life and Health Insurance Foundation for Education

** Source:  2005 LIMRA International “Trends in Life Insurance Ownership Among U. S. Households” report

Nancy Tommaso
NT Financial Services

As our loved ones get older we need to be more proactive in protecting them from the growing trend of elder financial abuse. The majority of elder financial abuse is committed by family members and caregivers, but there is a growing trend for strangers to target the elderly.

What is elder financial abuse? Abuse is defined in the Illinois “Elder Abuse and Neglect Law” as “causing any physical, mental or sexual injury to an eligible adult, including exploitation of such adult’s financial resources”. Elder financial abuse is a crime which may involve financial exploitation – the misuse or withholding of an older person’s resources to the disadvantage of the elderly person and/or the profit or advantage of another person. Elder abuse can also be in the form of fraud – using deception, trickery, false pretence, or dishonest acts or statements for financial gain.

Some examples of elder financial abuse by strangers:

• Grandparent scams – a “grandchild” calls in need of emergency funds
• Nigerian money offer scams – letters or emails from someone in a foreign country offering a large amount of money if you help them transfer money out of the country via your bank account
• Tax refund loans – offering an earlier tax refund for a high fee
• Bank examiner/auditor scam – a phone call from the bank needing your account number to help them catch a dishonest teller or other employee
• Telemarketing calls – using deception, exaggerated claims, etc. to get credit cards numbers or cash

How do we help?

First we need to know about loved ones financial situation. Discussing finances with our parents can be difficult. Some parents do not want their children to know about their financial situation. Others just do not want to talk about it. One way to get started is to explain that in order to help them, especially in the case of an emergency, you need to know where their important documents are located; i.e. wills, birth certificates, medical insurance, house title, etc. This often opens the door to more in depth discussion in the future.

You also need to educate with your parents about the scams and other situations where they might be taken advantage of. Remember, their generation is much more trusting of others. They grew up in a time when your word and a hand shake were all you needed to close a deal.

If you live close by it will be much easier to monitor bank accounts, credit cards, mail, etc. for unusual withdrawals, payments, requests. You also could monitor their accounts via on-line banking. If you do not live close by or you do not have the time you might consider hiring a Daily Money Manager to assist your parent. Daily Money Managers (DMMs) provide personal financial assistance to clients who have difficulty in managing their personal monetary affairs. The services meet a continuum of needs, from organizing and keeping track of financial and medical insurance papers, to assisting with check writing and maintaining bank accounts. DMMs work with senior citizens, people whose careers make it difficult for them to find time for their own paperwork, and with people whose medical issues simply make it difficult to keep up with their finances, among others. It is not uncommon for the adult child of an older person to seek the assistance of a DMM if the child does not feel they have the time or ability to maintain their parents’ affairs. To locate a DMM in your area visit the American Association of Daily Money Managers website at www.aadmm.com.

Terri F. Thompson

Details Management LLC

www.detailsmgmt.com

Numerous clients have told me that they want a divorce but can’t get one because their spouse will not “sign the papers”.  They are surprised when I tell them that their spouse does not have to sign anything.  As long as certain legal requirements are met, you can get a divorce.  You need to have a sufficient period of legal residency in the state and you must have legal grounds for the divorce.  Because of due process requirements, you also need to show that your spouse has been “served” with the divorce request.  This request is call a “Petition For Dissolution Of Marriage”.  The sheriff or special process server brings the Petition to your spouse.

These are ways to start a divorce without having papers served.  For instance, papers are not served if you choose to have a Collaborative Divorce.  Service of papers can also be avoided if you have a mediated or a negotiated divorce, or have made other arrangements through your attorneys.  These are all good topics for future blog discussion.

When your spouse says that she/he  will not “sign” for the divorce, she/he may be attempting to control or intimidate you so that you will not seek a divorce.  The irony of this is that you will be able to get the divorce, but absent a signed agreement, your spouse has given up input and control of the outcome by allowing a judge to make the decisions.

Illinois has a requirement that either you or your spouse must have continuously resided in the state for at least ninety days before commencing the action or before there is a final hearing of the case.

There are several legal grounds for a divorce in Illinois.  The most frequently used grounds are the “no-fault” grounds of Irreconcilable Differences and the “fault” grounds of Mental Cruelty.  If you and your spouse do not have an agreement for the divorce and your spouse will not sign papers, you can use the no fault grounds of Irreconcilable Differences if you and your spouse have lived separate and apart for two years.  This two year requirement can be waived and reduced to a separation period of six months if there is a signed agreement to do so.  Sometimes divorcing couples choose to reside together while their divorce is pending for financial or other reasons.  It is possible to show that you have lived separate and apart even if you have resided in the same home if you are not living as “husband and wife”.

If you use Mental Cruelty as your grounds, there is no waiting period other than the legal residency requirement.  Normally, you would not use these grounds if there is a divorce agreement.  This means that even if your spouse does not sign papers, does not want a divorce, and you do not have an adequate period of separation to use grounds of Irreconcilable Differences, you can get a divorce using grounds of Mental Cruelty if you can prove these grounds to the judge.

Your and your spouse will sign papers if there is an agreement regarding the divorce.  In that case, you will both sign a Marital Settlement Agreement.  This contains the financial terms of the divorce, such as support, division of property and allocation of debts.  If you have children and agree to joint custody, you both sign a Joint Parenting Agreement that sets forth a time sharing schedule, describes areas of joint decision making and outlines ways to communicate regarding the children.

If there is not an agreement regarding the divorce, there will be a hearing in front of a judge.  The judge will decide the terms of the divore and grant the divorce even if your spouse does not “sign the papers”.

Roselynn Gilbert Don

Law Office Of Roselynn Gilbert Don

Divorce, Collaborative Divorce, Mediation

2530 Crawford Avenue   Suite 106

Evanston, Illinois   60201

Phone:(847)869-9720

Fax: (847) 869-9725

Email:  Roselynn@DonLawOffice.com

Recently I appeared on an “Ask the Lawyer” panel for home and small office business operators. One question of universal interest was: which is the preferable type of business entity for a new enterprise–corporation or limited liability company (LLC)? My answer to this question is the standard one I learned in law school: “It depends!” This is not meant to be coy or cute. There are numerous considerations which will influence the decision. This article is not an exhaustive discussion of the pros and cons of each business format, but highlights some of their more salient features.

First and foremost, talk to your accountant. The nature of your business and the number of anticipated owners are critical elements. In terms of tax consequences, expectations as to income and payment of salaries, dividends or distributions are highly significant. Other items to consider are retention of earnings, choice of fiscal year and medical insurance, to name a few.

One purpose for incorporating or forming an LLC is to protect personal liability in the event of a lawsuit, in which case the damages would typically be limited to the assets of the entity. Another purpose is to obtain certain tax benefits such as deduction of expenses.

Corporation: There are basically two types: a C corporation and an S corporation. One person or closely held corporations often elect an S-corp because of the pass through of earnings and losses to the owners, like a sole proprietorship, without the “double taxation” on dividends of a C-corp.

An S-corp, also referred to as a “Sub S,” is regulated under Subchapter S of the Internal Revenue Code. An election form must be filed in order to procure this status. There is a limit on the maximum number of shareholders (100) and they must be US citizens. Earnings, whether or not retained, are deemed income to the shareholders.  A major benefit of the S-corp is that the shareholders may take a “reasonable” salary and then take non-taxable distributions, i.e. not subject to self-employment tax.

Depending upon the circumstances, a C-corp may be preferable to an S-corp because the marginal corporate tax rate for a C-corp may be lower than one’s individual tax rate. Also, medical benefits may be deducted and earnings may be retained.

LLC: An LLC, like an S-corp, provides limited liability for the owners and the earnings pass through. An LLC is not a corporation, but an entity organized under state law. It has ultimate flexibility in that it can be structured as a partnership or a corporation. The owners are “members” who hold “units.” A major disadvantage to an LLC is that self-employment tax  may apply to each active individual member’s share of the profits unlike the non-taxed S-corp distributions.

Which is easier to establish and maintain? Again, that depends.

Costs: An LLC is more expensive. If you incorporate or organize in Illinois, the fees are substantially different– LLC: $500 vs Corp: $175. Illinois also requires an annual filing. Minimum fee: LLC: $250 vs Corp: $100.

Taxes: Employees of both are subject to withholding taxes. Forms W-2 and Forms 1099 must be used as appropriate. Income tax returns required to be filed are: C-corp: Form 1120; S-corp: Form 1120S. LLC: If one member who is a person: 1040; If more than 1 member: a partnership return, Form 1065 with K-1′s issued to each member, or the LLC may elect to be taxed as a corporation. An EIN # is required of all except for a single person LLC who files a 1040.

Registered agent: This is the in-state person or company appointed to receive service of process of legal documents as well as the state annual report forms required of both types of business entities.

Documents: For a corporation to be a properly documented, bylaws and corporate minutes are required. The bylaws are typically standard. The annual meetings of shareholders and directors can be easily handled by an “action” by the majority of shareholders or directors in lieu of a meeting. The documentation can be standardized and updated every year.

An LLC which has more than 1 member should have an operating agreement. This can be a complex, comprehensive and costly document to have prepared. The LLC statute does not have the requirement of annual minutes. However, the operating agreement may require such and where there are multiple owners, company business actions should be documented and approved as a matter of good business practice.

Regardless of the business entity chosen, protection against personal liability is not absolute.  One factor the courts look at is the compliance with the formalities. Therefore, shareholders and owners should always make sure to document the significant company business decisions and activities and that they have been approved by the requisite majority.

In summation, the choice of business format for your company can have significant tax consequences. It is possible to convert from one type of entity to another, but that could involve substantial costs, so it is preferable to do it correctly from the beginning. Please be sure to consult with professionals before embarking on this important step.

Jan S. Weinstein
Jan S. Weinstein & Associates, Ltd.
Attorneys at Law
9933 Lawler Avenue
Suite 402
Skokie, IL
847/933-9890
847/933-9880 – fax
jan@jsweinsteinatty.com

Believe it or not, selling your home is really no different than selling a bottle of shampoo, a box of cereal or an automobile. So, when you go to put your home on the market, you need to approach it the same way as the people who are in charge of marketing those other products. Your real estate agent will be an invaluable resource in this regard, but to maximize your odds of success, it pays to take an active role in the marketing of this, your most valuable asset.

When you go to sell your home, the first thing you must realize is that it is NO LONGER YOUR HOME! It is a product for sale, and to be successful in selling it you have to employ the same kinds of strategies as you would to sell any other consumer product.

First, identify your target buyers and their needs and wants. Are you in a neighborhood that tends to attract young families, single professionals or empty nesters? Each of these groups is likely to want or need different things. Some of those needs are rational (space enough for a family of five, walking distance to the train, a good school district) and some are emotional (security, community, a certain lifestyle or a badge of success.). Remember that buyers may shop rationally with a list of features they need, but they buy the house that connects with them on an emotional level.

Second, know your competition. What other listings are competing for the same buyer and what do those other houses offer? Think about both the rational features of the house and the emotional benefits it offers. How does it stack up to competitive listings? What are its strengths and weaknesses on the things that really matter to your target buyer? What are the unique and positive aspects of your home that can give it an edge over the competition?

Third, “package” and “merchandise” your home to appeal to your target buyer and set it apart from your competition. Play up those points of superiority or uniqueness that you identified in step two. If you have been in your home for several years and your likely buyer is a young family, they are probably not going to appreciate some of the things that make this home for you. Instead, you need to think about what will make it feel like home to them. That means the wallpaper and those drapes with fussy swags and jabeaux will need to be replaced by a look from a Pottery Barn catalog. Show that young family how their children will enjoy playing in the large finished basement by staging it as a playroom and painting it a cheerful color. Stage the great room as a hip and comfortable hang-out where the family can watch TV together and play games. Show the couple how they can escape to their own private retreat by staging the master bedroom to look like a five star hotel room.

In this challenging real estate market, where the supply of houses for sale is greater than the number of buyers, having a house that’s clean and de-cluttered is not enough to get it sold. A seller must show target buyers how their house is a better value than the others on the market. This is accomplished by helping a buyer envision the lifestyle and emotional benefits that they can enjoy once they live in the house. A professional home stager has the training and experience to help you accomplish this. A stager can go through your home with you and provide you with a to do list if you want to do the work yourself, or can provide hands-on staging services for a modest fee.

Anne West
Redesign Doctor, LLC
www.redesigndoctor.com